Property Development Finance is very different from normal retail finance. There are three stages in property development finance.
Stage 1 – Land Acquisition
- Private Funding / Seed Capital
- Usually required in the conceptual stage.
- Covers cost of consultants
- Everything required to put together DA or Planning Permit Application.
- Land Acquisition
- Usually a retail loan.
- Must have an existing house on it.
- Long term loan.
- When purchasing just land – lender will only consider if it is part of a full development loan.
- Lenders do not like land banking loans.
- Land Sub-Division
- Lender may require you to first secure the raw land with their own money.
Stage 2 – Construction Loan
- Interest only & often capitalised.
- Lender may or may not finance GST costs.
- Interest is calculated on drawn down amount.
Stage 3 – Retail Loan
- Develop & Hold
- Offset Account
- Line of Credit